Views of Mr George Alexander Muthoot

Views of Mr. George Alexander Muthoot, MD,
Muthoot Finance - Monetary Policy

 Mr. George Alexander Muthoot, MD, Muthoot Finance - Monetary Policy

 Mr. George Alexander Muthoot, MD, Muthoot Finance.

 

“RBI’s status quo on rates was along expected lines but the MPC clearly delivered accommodative moves via non-interest tools. New measures such as on-tap TLTRO of Rs. 1 lakh crore among others will reduce the cost of borrowing for NBFCs and further ease access to liquidity for industry. 

Also, the announcement of rationalising risk weights for all new housing loans until March 31, 2022 and linking it only to LTV is a welcome move that reflects the central bank’s focus on catalysing credit flow and reviving the economy. The policy measures are expected to benefit even the underserved retail borrowers and SMEs which are integral to lifting economic activity.”

Shriram Housing Finance Limited raises

Shriram Housing Finance Limited raises Rs.300 cr from Banks

 ·        Raises over 700 cr in the current calendar year·        The Company reported a 25% growth in AUM

Shriram Housing Finance Limited (SHFL) amidst the current challenging circumstances prevailing in the financial sector, has raised long term debts of around Rs.300 crore from the banking sector. The company raised Rs.250 cr long term Loan from a PSU Bank at 8.50%, the loan being repayable in 5 years.  The company has also raised Rs.40 cr NCD under TLTRO 2 at an annualised coupon of 8.55%. With this, the company has raised over 700 cr in the current calendar year.

In the recently declared Financial Results for the year 2020 by Shriram Housing Finance, the company reported a 25% growth in its AUM to Rs.2305 crore by clocking disbursal of Rs.1127 crore for the year. The company has reported a jump of 160% in PBT from 25 crore in FY2019 to Rs.65 crore in FY2020. 

The PAT grew from 16.6 crore to 46.6 crore in FY2020 registering a growth of 179%. The net worth of the company thereby stood at Rs.513 crore. The company results have also shown a significant improvement in portfolio quality. Robust credit underwriting and collection efficiency has helped to build a superior loan book resulting in GNPA at 5 year low of 2.4% and NNPA at 2.1%. SHFL has also made an additional provision of Rs.10 crore for Covid related impact on its portfolio.

Mr. Ravi Subramanian, Managing Director & CEO, Shriram Housing Finance said, “We are happy that the market has shown confidence in us even during such challenging times. Despite the challenges, SHFL has always focused on getting new business without compromising on the portfolio quality and we look forward to work for the benefit of the society and our customers keeping in mind the current pandemic situation. Besides the debt raised so far, we also have NCDs in the pipeline. This only strengthens our belief that there is sufficient liquidity available for well managed companies.” 

Shriram Housing Finance Limited with over 65 branches across the country plans to tap the potent opportunity for cross-selling home loans. The company plans to leverage the Groups distribution strength (over 3500 branches across Shriram Transport & Shriram City Union Finance) to cater to the needs of the exclusive set of group customers.

Views of Mr. R.K.Gurumurthy, Head – Treasury,

Views of Mr. R.K.Gurumurthy, Head – Treasury, Lakshmi Vilas Bank on the RBI announcement today

“Continuing from where it left, the v.2 of additional monetary support from RBI to address the COVID-19 economic collapse, came with a specific objective of channelizing liquidity to credit oriented schemes. RBI has assured continuation with super-easy liquidity and softer rates policy to ease financial stress.

Reverse Repo rate has been cut by 25 basis so that the corridor now becomes 90 basis. The system has roughly 7 trillion of excess liquidity that are parked at RBI's reverse repo window. Today's cut is a disincentive to overnight investments and should find way into credit. Additional TLTRO of 50,000 Cr has been announced and is likely to continue. LCR requirement has been lowered to 80% until October 2020 - thereby releasing the pressure for banks to divert a larger part of their investments in HQLA.

Measures towards further relaxing NPA recognition norms and additional refinance facility to NABARD etc will help in deferring NPA recognition and also help rate transmission better. 

In recent times, yields on GSecs have hardened leading to sharp increase in the borrowing costs of several state governments. The spread over overnight repo is close to historic highs and therefore warranted strong action. The relaxation in WMA guidelines would go some distance towards addressing this.”